PayU To Acquire Controlling Stake in Consumer Lending Start-Up PaySense

The $185 million deal will see PaySense being merged with Naspers-owned PayU's pay-later service provider LazyPay.

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PayU will acquire a controlling stake in Indian consumer lending start-up PaySense for $185 million, the Netherlands-based company said on Friday. Following the acquisition, it will be merged with PayU's pay-later service provider LazyPay.


Additionally, PayU will invest upto $200 million in the new entity. Of the total amount, $65 million will be immediately invested while the balance would come over the next 24 months to grow the loan book, Naspers-owned PayU said in a statement.

Founded in 2015, the idea behind PaySense was to build a platform that uses tech and data science to facilitate consumer credit in India. The Mumbai-based start-up had last raised an $18 million Series B round led by PayU, which also saw participation from existing investors Nexus Venture Partners and Jungle Ventures.

"The combination will bring together two highly complementary companies, each with an excellent reputation in the alternative lending space," PayU said.

Tapping the Untapped

PayU's understanding of consumer understanding and purchase behavior, LazyPay's experience in customer acquisition and engagement, and PaySense's analytics, tech and risk management capabilities will help serve the new-to-credit population in India, said PayU.

"We continue to witness the massively untapped market potential for short-term collateral-free loans among the digitally savvy aspirational youth," said PaySense's co-founder Sayali Karanjkar.

According to a BCG report, India's digital lending market represents a $1 trillion opportunity over the next five years.

"PayU is a natural partner for us as we both strive to make finance more simple, accessible and transparent. We're excited to start bringing our personal loan product to more consumers throughout India and truly democratise credit," said PaySense's founder and chief executive officer Prashanth Ranganathan.

Ranganathan would lead PayU's credit business in India as CEO of the new entity, said PayU.

Exit For Nexus

The acquisition will also see existing investors including Nexus exiting the company.

Nexus invested in PaySense at a concept stage in 2015 before being part of the follow-on rounds.

"Paysense benefited immensely from their insights and connects, and appreciation of what it takes to build a large, sustainable company from the start-up stage," Ranganathan said in a separate statement.